Archive for April, 2015

Critics of the Supreme Court’s conservative wing like to say it’s instinctively pro-business. The justices on Tuesday tested that proposition in a fascinating case about whether bankruptcy law instructs judges to void liens on underwater properties. On one side lie the interests of Bank of America, which is the petitioner and doesn’t want the loans to be “stripped off,” that is, voided. On the other side is the plain statutory text, which says they should be. The poetic twist is that, in a very similar 1992 case, the Supreme Court ignored the plain text and held in favor of the banks — over the forceful dissent of one Justice Antonin Scalia.

The facts of the case are simple, and reflect a common situation post-2008. In each of two consolidated cases, a debtor had two mortgage liens on a property, one subordinated to the other. The property lost so much value that the debt on the first mortgage was greater than the value of the house — in common terms, the house was underwater. Given that this was so, the second, subordinated lien, owned by Bank of America, was completely underwater. When filing for bankruptcy, the debtor asked that the second lien be eliminated under the federal Bankruptcy Code.

Justices concerned about costs of Obama administration’s new standards

Industry groups and 21 states challenge regulations on power plants

Coal-burning power stations, such as the Jim Bridger Power Plant in Wyoming, are at the centre of a case currently before the US supreme court about new pollution regulations. Photograph: Jim Urquhart/Reuters/Corbis

The US supreme court’s conservative majority on Wednesday signalled hostility towards the Obama administration’s refusal to consider costs before regulating emissions of mercury and other hazardous pollutants mainly from coal-fired power plants.

Obama unveils historic rules to reduce coal pollution by 30%

Conservative justice Anthony Kennedy, based on questions he asked during a 90-minute oral argument, could be a possible swing vote on the nine-justice court, with its four liberals appearing to back the US Environmental Protection Agency’s rationale for the regulation.

The case marks the latest legal test to President Barack Obama’s environmental agenda to reach the high court. Industry groups and 21 states led by Michigan challenged the rule, announced in 2012 and due to go into effect this year.

The conservatives, including Kennedy, asked questions that indicated they were concerned it was not enough that the agency implicitly considered costs when issuing standards for specific pollution sources.

Under the section of the Clean Air Act in question, the agency can regulate power plants for mercury and other toxic pollutants if it deems it “appropriate and necessary”. The provision does not explicitly state whether the EPA was required to include costs in making its decision, and the administration decided it did not have to.

At one point, Kennedy told the Obama administration lawyer Donald Verrilli “the game is over” if the government did not consider costs at the early stage of rule-making. But earlier in the hearing, Kennedy seemed to be open to the idea that the EPA considered costs at a later stage in the regulatory process when it decided what specific standards to impose.

Chief Justice John Roberts indicated it was not enough for the agency to say it implicitly considered costs if there is no evidence that it did so. Roberts also suggested he was troubled by the disparity between the costs and benefits of the regulation, saying it was a “red flag”.

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The challengers say the costs are $9.6bn a year but the benefits are worth only a few million dollars.

The government says it did not quantify some of the benefits, but says they could be worth billions of dollars, including a reduction in mercury poisoning, which can lead to developmental delays and abnormalities in children.

Liberal justice Stephen Breyer appeared eager to find a middle ground in which the court could acknowledge the EPA did consider costs at some point.

The way the law is structured, the agency can categorise different pollution sources based in part on how burdensome the standard would be, which gives the government “the ability to take into account at least serious cost problems”, Breyer said.

The challengers appealed after an appeals court upheld the regulation in June 2014.

Companies opposing the rule include Peabody Energy Corp, the country’s largest coal producer. Exelon Corp, the biggest US nuclear power plant operator, is among several power companies supporting the rule.

Judicial independence is predicated on “good faith” decision-making. It was never intended to include “bad-faith” decision-making, where a judge knowingly and deliberately disregards the facts and law of a case. This is properly the subject of disciplinary review, irrespective of whether it is correctable on appeal. And egregious error is also misconduct, since its nature and/or magnitude presuppose that a judge acted wilfully, or that he is incompetent.

How can you make any assessment of how judicial misconduct mechanisms are working unless you reach out to the victims of judicial misconduct who have used them? — Elena Ruth Sassower

Reprinted by permission of The Long Term View, Massachusetts School of Law, Vol. 4, No. 1, 1997, pp. 90-97. See original article [PDF]. Note: Publication of this critique does not constitute an endorsement of the Center for Judicial Accountability about particular cases.

The most serious misconduct by judges is that which is the least likely to subject them to discipline. It is not what they do in their private lives, off the bench, but what they do on the bench in the course of litigation. The obvious image is the judge who runs his courtroom as if he owns it, who looks down from his elevated bench and treats litigants and their attorneys in an imperious and abusive fashion. But even where a judge is, as he is supposed to be, patient and dignified in his demeanor, every court appearance, just like every written motion, involves a judge ruling on a procedural or substantive aspect of a case. And there are judges who, while presenting a veneer of fairness, are intellectually dishonest. They make rulings and decisions which are not only a gross abuse of discretion, but which knowingly and deliberately disregard “clear and controlling law” and obliterate, distort, or fabricate the facts in the record to do so.

Why would a judge be intellectually dishonest? He may be motivated by undisclosed bias due to personal or political interest. Judicial selection processes are politically controlled and closed, frequently giving us judges who are better connected than they are qualified. And once on the bench, these judges reward their friends and punish their enemies. Although ethical codes require judges to disclose facts bearing upon their impartiality, they don’t always do so. They sit on cases in which they have undisclosed relationships with parties, their attorneys, or have interests in the outcome, and do so deliberately because they wish to advantage either one side over another or sometimes themselves.

They exercise their wide discretion in that side’s favor. That’s the side for whom deadlines are flexible and for whom procedural standards and evidentiary rules don’t apply. A common thread running through judicial misconduct cases is litigation misconduct by the favored side. Meanwhile, the other side struggles to meet inflexible deadlines and has its worthy motions denied. In extreme cases, a judicial process predicated on standards of conduct, elementary legal principles, rules of evidence, simply ceases to exist.

Intellectual Dishonesty

Every case has many facts, any of which may be inadvertently “misstated” in judicial decisions. But judicial misconduct is not about innocent “misstatement” of facts, and certainly not about peripheral facts. It involves a judge’s knowing and deliberate misrepresentation of the material facts on which the case pivots. These facts determine the applicable law. If the applicable law doesn’t allow the judge to do what he wants to do, he’s going to have to change the material facts so that the law doesn’t apply. When judges don’t want to put themselves on record as dishonestly reciting facts, they just render decisions without reasons or factual findings.

The prevalence of intellectually dishonest decisions is described by Northwestern Law Professor Anthony D’Amato in “The Ultimate Injustice: When the Court Misstates the Facts” [1]. He shows how judges at different levels of the state and federal systems manipulate the facts and the law to make a case turn out the way they want it to. It quotes from a speech by Hofstra Law Professor Monroe Freedman to a conference of federal judges:

Frankly, I have had more than enough of judicial opinions that bear no relationship whatsoever to the cases that have been filed and argued before the judges. I am talking about judicial opinions that falsify the facts of the cases that have been argued, judicial opinions that make disingenuous use or omission of material authorities, judicial opinions that cover up these things with no-publication and no-citation rules.

Afterward, when Professor Freedman sat down, a judge sitting next to him turned to him and said, “You don’t know the half of it.”

Another argument to consider…. (Please take a go at polishing the foregoing) The “one bite at the apple rule” should have been applied to Gallion as a consequence of the near acquittal of Gallion in the first trial that was fair. Gallion’s life Vis a Vis the just administration of justice in the federal court system leaves one to wonder. Is it really like “pulling teeth” to get a just decision in appellate review in a federal criminal appeal.

The Judgment at Nuremberg has this scenario.

“ Haywood visits Janning in his cell. Janning affirms that Haywood’s decision was just, but asks him to believe that he and the other defendant judges never desired the mass murder of innocents. Judge Haywood replies, “Herr Janning, it came to that the first time you sentenced a man to death you knew to be innocent.” Haywood departs; a title card informs the audience that, of 99 Nuremberg defendants sentenced to prison terms, none were still serving their sentences as of the film’s 1961 release. “Gallion asks the Court. Has it really come to this?

The undersigned counsel knows that the denial in this case is a complete miscarriage of justice. It is a “white wash” to avoid the undoing of over a 1000 docket entries and thousands of DOJ man hours prosecuting and destroying Gallion’s life and personal assets. Now all Gallion has is his life and he want to keep it. The notation by Helmers of $50 million for Charity made on the Settlement document during Mediation coupled with Schaefer’s Interview ( that the US had and failed to disclose to the Defense) of a discussion of monies being placed in a Charity during Mediation in the presence of all the AHP attorneys supports a finding that Gallion is INNOCENT of the charge that the $200 million settlement was only for 440 claimants as Gallion testified in both criminal trials.

“Gallion next argues that the prosecution improperly withheld investigatory materials that it received from the KBA. To prevail on his claim, Gallion must show that the prosecution withheld exculpatory or impeachment evidence and that the suppression resulted in prejudice. See Bell v. Howes, 703 F.3d 848, 853 (6th Cir. 2012). Reasonable jurists would not debate the district court’s rejection of this claim because Gallion failed to identify specific materials that should have been disclosed and explain how the suppressed materials would have affected the outcome of his trial.”

The foregoing is a FALSEHOOD. WHOEVER WROTE THAT CANNOT READ .

Gallion’s Application in bold type says the following:

Vol.18A Tr.106)

Q. Now, Professor Erichson, in your opinion upon review of all of the information that you have done, in this aggregate settlement that you have described of $220 million for 440 clients, would there be excess funds?

A. No. There is $200 million. That’s the amount that the lawyers have to work with. If the plaintiffs’ lawyers have to do the allocation themselves, then they take that money, they divide it up, they allocate it among their clients. APPLICATION P.10

Only after Gallion and Cunningham were convicted did they learn that during the trial, the U.S. Attorney was aware of, and had access to, documents in the possession of the Kentucky Bar Association (“KBA”) that demonstrated that the KBA was seeking disbarment of Chesley by accusing Chesley of the very conduct that he had denied at trial and had information that was inculpatory with regard to Chesley. Kentucky Supreme Court Order, dated May 14, 2007. Exhibit B in Gallion’s Petition less than 28 USC 2255.

“The OBC is hereby authorized to release to the FBI and its counsel the documents, evidence and information that it has gathered or collected in connection with ANY DISCIPLINE MATTER arising out of the Darla Guard, et al., or Jonetta Moore, et al., v A.H. Robbins, et al., Case No. 98‐CI‐795.”

On April 10, 2006 the Kentucky Supreme Court entered the following Order.

“Upon request of the United States Attorney for the Eastern District of Kentucky directed to the Judicial Conduct Commission for access to the records of the Commission pertaining to Joseph F. Bamberger” the Kentucky Supreme Court in an Order dated April 10, 2006 waived the” confidentiality of papers and information relating to the Commission’s investigation of Joseph F. Bamberger” in favor of the United State Attorney.

Government Response to Gallion’s Motion to Vacate, p. 16. (GALLION’S APPLICATION) “Gallion is wrong. The United States was not provided with any other witness statement, impeaching, or exculpatory material by the KBA. Nor, did the United States have the legal means to obtain such information.”

The court states on page 15 of the Memorandum Opinion and Order that there is no for support for the inference that the Government had information that should have been disclosed to Gallion. APPLICATION PP. 14, 15

David Schafer’s Interview in 2005 with the Judicial Conduct Commission “JCC” was part of Judge Bamberger’s KBA file.

“Mr. Schaefer related the following: “Schaefer recalled that during the mediation sessions (2001), there was talk by some of the plaintiffs’ attorneys of the establishment of a charitable fund to receive any leftover monies as part of the settlement. Although he could not remember exactly which attorneys participated in this discussion, Schaefer believed that Pierce Hamblin, David Helmers, Shirley Cunningham, William Gallion and Stanley Chesley were present, and along with Schaefer’s two co‐counsel”. (D.E. 343‐346) APPLICATION P. 15

At trial on Direct Schaefer testified he did not remember Indemnification being discussed at the May 9 Settlement Hearing. He only recalled telling Judge Bamberger that the total amount of the Settlement was $200 million. (D.E. 294; Vol. 16A Tr.32, 33)

Judge Bamberger testified that in an off the record discussion at the May 9, 2001 hearing where the Settlement was approved he was advised in presence of Mr. Schaefer that indemnification was unlimited.( D.E. 294; Vol 15A, Tr. 82-84; Vol 25A Tr. 52). APPLICATION P.15

“The ultimate injustice is when the court misstates the facts.”

Anthony D’Amato is professor of law at Northwestern University and the author of over 20 books and 110 articles. The latter include: •”The Ultimate Injustice: When the Court Misstates the Facts,” Cardozo Law Review, Vol. 11: 1313 (1990).

On March 25, 2015, the U.S. Supreme Court issued a ruling overturning a lower court’s decision dismissing a woman’s Pregnancy Discrimination Act (“PDA”) case and remanded the case for further proceedings. By overturning the Fourth Circuit’s decision to reject that UPS driver’s pregnancy discrimination claim today, the Supreme Court has resuscitated the question of whether, and in what circumstances, PDA requires employers who provide accommodations to non-pregnant employees with work limitations to also provide accommodations to pregnant employees who are “similar in their ability or inability to work.”

When she became pregnant, the former UPS driver, Peggy Young, was placed on a lifting restriction. Young’s request for light duty was denied by UPS however, because it only provided accommodations to three categories of workers: those who had been injured on the job, those who lost their Department of Transportation certification, and those who had a disability as defined by the Americans with Disabilities Act. UPS explained that its policy was pregnancy neutral. Young sued UPS under a section of the PDA however, which requires employers to treat pregnant employees the same as others “similar in their ability or inability to work.” Young claims that because UPS offered light duty accommodations to employees who were similarly situated (but not pregnant), it must offer her the same accommodation.

The U.S. District Court for the District of Maryland granted summary judgment to UPS after deciding that UPS’ decision to deny Young light duty work during her pregnancy turned on “gender neutral criteria” and that there was no direct evidence of discrimination on the basis of sex. The U.S. Court of Appeals for the Fourth Circuit affirmed the lower court’s decision and found that UPS’ policy was facially neutral because accommodating some employees, but not others was “not direct evidence of pregnancy-based discrimination.”

On March 25, 2015, the United States Supreme Court rejected the reasoning of the lower court with a 6-3 vote in Young’s favor. On behalf of the majority, Justice Stephen Breyer wrote that the lower court is required to decide if UPS had “legitimate, nondiscriminatory, nonpretextual justification for treating employees differently.” Breyer added that there is a “genuine dispute as to whether UPS provided more favorable treatment to at least some employees whose situation cannot reasonably be distinguished from Young’s.” Courts across the nation will now have to re-examine Young’s case with a more positive view of the pregnancy discrimination claim.

Regardless of the Fourth Circuit’s forthcoming ruling as to whether and to what extent an employer is legally required to accommodate pregnant employees under the PDA, employers should consider providing workplace accommodations to pregnant employees for a multitude of reasons. Importantly, since the Fourth Circuit’s decision – and even before the Supreme Court’s Opinion was issued today – the Equal Employment Opportunity Commission (“EEOC”) updated guidance to employers clarifying that employers should accommodate women in Young’s situation. Even the Supreme Court recognized that in “2008, Congress expanded the definition of ‘disability’ under the ADA to make clear that ‘physical or mental impairment[s] that substantially limi[t]’ an individual’s ability to lift, stand, or bend are ADA-covered disabilities.” While expressing no view regarding the recent statutory changes, the Supreme Court also recognized that as interpreted by the EEOC, the new statutory definition would require employers to accommodate employees whose temporary lifting restrictions originated off the job. Interestingly, UPS has changed its policy, and now says it will try to accommodate pregnant workers. Finally, employers must recognize that pregnancy discrimination claims are sure to abound as the topic has grabbed the national spotlight, and it will likely continue to do so for some time

A truly stunning debasement of the U.S. justice system just occurred through the joint efforts of the Obama Justice Department and a meek and frightened Obama-appointed federal judge, Edgardo Ramos, all in order to protect an extremist neocon front group from scrutiny and accountability. The details are crucial for understanding the magnitude of the abuse here.

At the center of it is an anti-Iranian group calling itself “United Against Nuclear Iran” (UANI), which is very likely a front for some combination of the Israeli and U.S. intelligence services. When launched, NBC described its mission as waging “economic and psychological warfare” against Iran. The group was founded and is run and guided by a roster of U.S., Israeli and British neocon extremists such as Joe Lieberman, former Bush Homeland Security adviser (and current CNN “analyst”) Fran Townsend, former CIA Director James Woolsey, and former Mossad Director Meir Dagan. One of its key advisers is Olli Heinonen, who just co-authored a Washington Post Op-Ed with former Bush CIA/NSA Director Michael Hayden arguing that Washington is being too soft on Tehran.

This group of neocon extremists was literally just immunized by a federal court from the rule of law. That was based on the claim — advocated by the Obama DOJ and accepted by Judge Ramos — that subjecting them to litigation for their actions would risk disclosure of vital “state secrets.” The court’s ruling was based on assertions made through completely secret proceedings between the court and the U.S. government, with everyone else — including the lawyers for the parties — kept in the dark.

In May 2013, UANI launched a “name and shame” campaign designed to publicly identify — and malign — any individuals or entities enabling trade with Iran. One of the accused was the shipping company of Greek billionaire Victor Restis, who vehemently denies the accusation. He hired an American law firm and sued UANI for defamation in a New York federal court, claiming the “name and shame” campaign destroyed his reputation.

Up until that point, there was nothing unusual about any of this: just a garden-variety defamation case brought in court by someone who claims that public statements made about him are damaging and false. That happens every day. But then something quite extraordinary happened: In September of last year, the U.S. government, which was not a party, formally intervened in the lawsuit, and demanded that the court refuse to hear Restis’s claims and instead dismiss the lawsuit against UANI before it could even start, on the ground that allowing the case to proceed would damage national security.

When the DOJ intervened in this case and asserted the “state secrets privilege,” it confounded almost everyone. The New York Times’s Matt Apuzzo noted at the time that “the group is not affiliated with the government, and lists no government contracts on its tax forms. The government has cited no precedent for using the so­-called state­ secrets privilege to quash a private lawsuit that does not focus on government activity.” He quoted the ACLU’s Ben Wizner as saying: “I have never seen anything like this.” Reuters’s Allison Frankel labeled the DOJ’s involvement a “mystery” and said “the government’s brief is maddeningly opaque about its interest in a private libel case.”

Usually, when the U.S. government asserts the “state secrets privilege,” it is because they are a party to the lawsuit, being sued for their own allegedly illegal acts (such as torture or warrantless surveillance), and they claim that national security would be harmed if they are forced to defend themselves. In rare cases, they do intervene and assert the privilege in lawsuits between private parties, but only where the subject of the litigation is a government program and one of the parties is a government contractor involved in that program — such as when torture victims sued a Boeing subsidiary, Jeppesen, for its role in providing airplanes for the rendition program and the Obama DOJ insisted (successfully) that the case not go forward, and the victim of U.S. torture was thus told that he could not even have a day in court.

But in this case, there is no apparent U.S. government conduct at issue in the lawsuit. At least based on what they claim about themselves, UANI is just “a not-for-profit, non-partisan, advocacy group” that seeks to “educate” the public about the dangers of Iran’s nuclear program. Why would such a group like this even possess “state secrets”? It would be illegal to give them such material. Or could it be that the CIA or some other U.S. government agency has created and controls the group, which would be a form of government-disseminated propaganda, which happens to be illegal?

What else could explain the basis for the U.S. government’s argument that allowing UANI to be sued would risk the disclosure of vital “state secrets” besides a desire to cover up something quite untoward if not illegal? What “state secrets” could possibly be disclosed by suing a nice, little “not-for-profit, non-partisan, advocacy group”?

We don’t know the answers to those questions, nor do the lawyers for the plaintiffs whose lawsuit the DOJ wants dismissed. That’s because, beyond the bizarre DOJ intervention itself, the extreme secrecy that shaped the judicial proceedings is hard to overstate. Usually, when the U.S. government asserts the “state secrets privilege,” at least some information is made public about what they are claiming: which official or department is invoking the privilege, the general nature of the secrets allegedly at risk, the reasons why allowing the claims to be adjudicated would risk disclosure, etc. Some redacted version of the affidavit from the government official making the secrecy claim is made part of the case.

Here, virtually everything has been hidden, even from the plaintiffs’ lawyers. Not only did the U.S. government provide no clue as to what the supposedly endangered “state secrets” are, but they concealed even the identity of the agency making the claim: was it the CIA, the Treasury Department, the State Department, some combination? Nothing is known about any of this, not even who is making the secrecy claim.

Instead, the DOJ’s arguments about why “secrecy” compels dismissal of the entire lawsuit were made in a brief that only Judge Ramos (and not even the parties) gets to read, but even more amazingly, were elaborated on in secret meetings by DOJ lawyers in the judge’s chambers with nobody else present. Were recordings or transcripts of these meetings made? Is there any record of what the U.S. government whispered in the ear of the judge to scare him into believing that National Security Would Be Harmed™ if he allowed the case to proceed? Nobody knows. The whole process is veiled in total secrecy, labeled a “judicial proceeding” but containing none of the transparency, safeguards or adversarial process that characterizes minimally fair courts.

This sham worked. This week, Judge Ramos issued his ruling dismissing the entire lawsuit (see below). As a result of the DOJ’s protection, UANI cannot be sued. Among other things, it means this group of neocon extremists now has a license to defame anyone they want. They can destroy your reputation with false accusations in a highly public campaign, and when you sue them for it, the DOJ will come in and whisper in the judge’s ear that national security will be damaged if — like everyone else in the world — UANI must answer in a court of law for their conduct. And subservient judicial officials like Judge Ramos will obey the U.S. government’s dictates and dismiss your lawsuit before it begins, without your having any idea why that even happened.

Worse, in his written ruling, the judge expressly acknowledges that dismissal of the entire lawsuit at the start on secrecy grounds is what he calls a “harsh sanction,” and also acknowledges that “it is particularly so in this case because Plaintiffs not only do not get their day in court, but cannot be told why” (emphasis added). But he does it anyway, in a perfunctory 18-page opinion that does little other than re-state some basic legal principles, and then just concludes that everything the government whispered in his ear should be accepted. Just read for yourself what Judge Ramos said in defending his dismissal to see how wildly disparate it is from everything we’re propagandized to believe about the U.S. justice system:

What does it cost to miss a deadline? For the company that makes the prescription painkiller OxyContin, the answer could be more than $1 billion.

Kentucky is suing Purdue Pharma on claims that the company misrepresented its prescription painkiller, resulting in a wave of addiction and increased medical costs across the state. But before the trial can start, both sides must file “admissions” so the court could determine a set of facts that are not in dispute.

Kentucky officials filed theirs, which included claims that Purdue Pharma lied about the addictiveness of the drug to doctors, who then overprescribed it to an unwitting population of poor people in Eastern Kentucky.

When Purdue Pharma did not respond, Pike Circuit Judge Steven Combs ruled those claims were admissible in court. That cleared the way for the state to potentially win the lawsuit, with the only question being how much Purdue Pharma would have to pay.

“I always thought if we ever got it to a court of law a billion dollars wouldn’t touch it,” said Kentucky House Speaker Greg Stumbo, whose office filed the lawsuit when he was state attorney general.

Combs’ decision surprised company officials. When the state filed its claims in 2007, Purdue Pharma had 45 days to respond. But in the middle of that window, Purdue Pharma moved the case to federal court, which put the state-court action on hold.

More than five years later, the federal court sent the case back to state court at the request of the Kentucky attorney general’s office.

Attorney General Jack Conway’s office argues that meant the clock re-started on the original deadline for Purdue Pharma to respond to the state’s request that it admit or deny damaging conduct.

However, Purdue Pharma contends that the original deadlines died when the case was transferred to federal court and that the state should have had to serve new requests for admissions on the company. On Thursday, the two sides made oral arguments to the state Supreme Court on the issue.

Purdue Pharma wants the high court to issue an order that would in effect strike down the admissions of liability Combs accepted.

Purdue Pharma said a co-defendant in the case, Abbott Labs, also missed the deadline yet the court allowed that company to file a response anyway. And they said if the case moves forward like this, the company won’t be able to adequately defend itself and won’t be able to get information from Kentucky officials about the state’s role in the epidemic of prescription painkiller abuse.

“The commonwealth is going to be able to use (these admissions) as a sword and as a shield to keep us from finding the information that we need to develop a full record,” attorney Daniel Danford said.

Danford argued that Combs’ ruling was incorrect and that letting it stand would cause irreparable damage to the company.

On the other hand, striking down Combs’ order would just put the case back on its original path and not hurt the state, Danford said.

Conway’s office contends the state lawsuit was suspended when it was transferred to federal court, then re-started when it came back. That’s the way courts have handled cases like this going back 50 years, and making an exception for Purdue Pharma will result in a flood of similar requests from other litigants who miss deadlines, the state contends.

“Purdue Pharma could care less about the merits of this case,” Assistant Attorney General Mitchel Denham said. “They are a multi-billion-dollar company here asking this court for special accommodations and to change the rules because they did not follow the clear and simple rules.”

Conway’s office also argues that the company would have adequate appeal remedies if the high court upholds the decision to let the admissions of liability be used against the company.

And the state argues it already has been harmed by how much time Purdue Pharma kept the case alive in federal court. One key witness died, for instance.

The company and three officers pleaded guilty in federal court in Virginia in 2007 to making misleading claims about the addiction potential of OxyContin. A judge ordered a fine of more than $630 million.

Kentucky had joined other states in an action against Purdue Pharma, but the company offered the state only a little more than $500,000 to settle.

The state rejected the settlement and joined Pike County in a lawsuit against the company.

Conway said the county settled its complaint for about $4 million. The state has a stronger case, however, he said.

Conway said Thursday that the company is trying to escape the consequences of fueling a deadly epidemic of drug abuse.

“We’re just holding their feet to the fire,” he said.

OxyContin is the brand name for oxycodone, an opioid that the FDA approved for alleviating chronic pain in 1995. It was designed as a pill to release a steady flow of painkiller over 12 hours.

Drug abusers quickly learned to crush the pill, however, releasing a rush of the drug all at once.

The company won approval of a tamper-resistant version of the pill in 2010 and said it has taken extraordinary measures to combat drug abuse.

In a May 2014 post we discussed the case of Oro-Jimenez v. Com. 412 S.W.3d 174 (Ky. 2013), in which the Kentucky Supreme Court held, under a palpable error review standard, that the voir dire process used in Jefferson County, which does not follow the method prescribed by Kentucky court rules and administrative procedures, did not warrant reversal in the absence of a showing of prejudice. That voir dire process is also used in civil cases in Jefferson County.

More recently, in St. Clair v. Com., 451 S.W.3d 597 (Ky. 2014), a capital murder case, the Supreme Court held that the defendant had failed to preserve for review any error relating to the noncompliant Jefferson County process where his counsel stated a preference for that method and the defendant himself apparently agreed to it.

St. Clair also reiterated the proper procedure for preserving for review a trial court’s denial of a challenge for cause of a potential juror. Unless the party who made the challenge uses a peremptory challenge on the juror whose challenge for cause was denied, and then designates an alternate juror on whom that party would have used a peremptory challenge if the for-cause challenge had been sustained, the issue is not preserved for appeal. See also Grubb v. Norton Hosps., Inc., 401 S.W.3d 483 (Ky. 2013); Gabbard v. Com., 297 S.W.3d 844 (Ky. 2009).

4/1/2015

The Truth in Lending Act (“TILA”) requires lenders to make certain disclosures to borrowers before the parties close on a residential mortgage. TILA also affords borrowers the right to rescind a mortgage for any reason for three days after the transaction. Furthermore, if a lender fails to make the disclosures that TILA requires, then the borrower may rescind the transaction within three years or until the sale of the secured property, whichever comes first.

On January 23, 2015, the U.S. Supreme Court issued a significant opinion that clarifies how a borrower may exercise the right to rescind. Previously, many federal courts required a borrower seeking rescission to file a declaratory judgment action. If the borrower failed to file suit within three years, the borrower lost the right to rescind forever. However, in Jesinoski v. Countrywide Home Loans, the Supreme Court ruled that the plain text of TILA only requires a borrower to provide timely written notice of rescission to the lender.

In this case, Larry and Cheryl Jesinoski refinanced the mortgage on their Minnesota home by borrowing $611,000.00 from Countrywide Home Loans, Inc. (now part of Bank of America). The couple then used the funds to pay off multiple consumer debts. Exactly three years later, the Jesinoskis sent “all interested parties” a letter stating that they never received the required TILA notices and were rescinding the mortgage. Denying that it failed to comply with TILA, Countrywide refused to recognize the validity of the Jesinoskis’ rescission notice. One year later, the couple sued Countrywide seeking a court-ordered declaration of rescission as well as monetary damages.

Since the Jesinoskis filed their lawsuit four years after the original transaction, Countrywide claimed the borrowers were outside of the three-year window to rescind the mortgage. Countrywide further argued that rescission was a judicial remedy that could only be obtained through a court order. In other words, the Jesinoskis could not unilaterally void their mortgage with a mere letter. Relying upon prior precedent, both the district court and the Eighth Circuit Court of Appeals sided with Countryside.

In a unanimous opinion, the Supreme Court reversed the Eighth Circuit. Justice Antonin Scalia noted that 15 U.S.C. § 1635(a) specifically provides that a borrower “shall have the right to rescind… by notifying the creditor… of his intention to do so.” Countrywide argued that § 1635(a) only applied to cases where both parties agreed that the lender failed to provide the truth-in-lending disclosures at closing. However, Justice Scalia countered that TILA does not distinguish between disputed and undisputed rescissions. The Court also noted that TILA eliminates the common-law rule that a borrower must tender the proceeds received in a transaction before rescission may occur. In other words, a mortgage is canceled the moment the borrower notifies the lender in writing of the rescission.

Some fear that the Jesinoskiopinion permits borrowers to frivolously rescind mortgages. However, lenders may take some steps to protect their legal rights:

Lenders should document their compliance with TILA and request that borrowers acknowledge in writing that they received the lender’s truth-in-lender disclosures at closing.

Upon receipt of a written rescission notice, lenders must decide whether to contest the rescission. If the lender agrees that it failed to comply with TILA, then the borrower must return all payments and the lender must terminate its security interest. The Jesinsokiruling, however, does not indicate what will happen if the borrower cannot return the principal. This is likely to be an area of future litigation.

If the lender objects to the validity of a rescission notice, then the lender should send a letter to the borrower that details its compliance with TILA’s disclosure requirements. At that point, either the lender or the borrower may file a declaratory judgment action to determine the validity of the rescission. Alternatively, the lender may file a foreclosure action with the recognition that the borrower will likely raise rescission as an affirmative defense.

While many questions remain unanswered, Jesinoski makes clear that borrowers preserve their recession rights simply by providing writing notice to the lender. Even if a borrower submits a baseless rescission notice, a lender must take prompt action to preserve its legal rights.

LOUISVILLE, KY. — Kentucky’s Supreme Court on Thursday restricted the authority of courts to intervene in police interrogations, ruling in a case dealing with the questioning of a man during an investigation into his mother’s slaying.

In his majority opinion, Chief Justice John D. Minton Jr. wrote that courts “are not vested with general jurisdiction” over criminal matters until prosecution begins. An exception is the authority of judges to issue search warrants, he said.

The case focused on whether a state criminal procedure rule gives judges the authority to intervene in police interrogations of suspects.

“The investigation of crimes is a function of the executive branch; and before prosecution of the accused reaches the courts, courts lack general jurisdiction to intercede via (the criminal procedure rule) in the investigation of the accused,” Minton wrote.

Prosecution begins in the court system through such means as a criminal citation, arrest warrant, criminal summons or grand jury indictment, he said.

The ruling stems from a case in which Samuel Terrell was taken into custody by police investigators wanting to question him about his mother’s slaying. A circuit judge — at the request of Terrell’s father — halted the questioning until Terrell was allowed access to a public defender.

The judge’s order was upheld by the state Court of Appeals, but the Supreme Court vacated the circuit court’s order in Thursday’s ruling.

With its opinion, the state’s high court retreated from a ruling in a prior case that held courts had the authority to interrupt police interrogations and to mandate an accused’s access to an attorney at the request of a “benevolent third party.”

Minton said an accused person has the right to an attorney during an interrogation, and said the criminal procedure rule guarantees that attorneys be given access to their clients in custody. But the rule is not “a vehicle for the appointment of an attorney or interference by the judicial branch in pre-prosecution criminal investigations,” the chief justice wrote.

“It could be accurately described as a visitation rule that prevents an attorney from being barred from meeting with the attorney’s client,” he said. “The rule does not … foist counsel on the individual in custody.”

Minton wrote that the constitutional right to counsel is a personal right.

“So the individual in custody retains control and may wish to refuse the attorney and continue talking with police,” he said.

The ruling drew a dissent from Justice Michelle Keller. She maintained the circuit court had jurisdiction in the Terrell case, which she said negated the separation of powers argument. She said the case also delves into a primary function of the courts — to ensure individual rights aren’t violated.

“If the court cannot intervene to protect a constitutional right at this most critical stage, then the right has no meaning,” she wrote.